4.01 Foundational knowledge of promotion

1. 4.01 Foundational knowledge of promotion Part F: Explain the need for truthfulness in promotional messages and claims

2. Definition & Need • Truthfulness refers to the ACT of giving TRUE information or facts about something • Is useful to customers because it helps them buy or use products satisfactorily • Will improve the customer’s purchase or use experience • Can enhance patronage of goods , enhance resale, repeat business • Can make a dynamic contribution to the economy, creating jobs

3. How misleading promo is regulated • Federal Trade Commission (FTC) – regulatory power to step in and end any potentially misleading or deceptive claims • Advertising must be truthful and non-deceptive • Advertisers must have evidence to back up their claims • Advertisements cannot be unfair

4. What makes an ad Deceptive Unfair If it causes or is likely to cause substantial consumer injury which a consumer could not reasonable avoid It is not outweighed by the benefit to consumers • If it contains a statement or omits information that is likely to mislead consumers acting reasonable under circumstances • Is material – important to a consumer’s decision to buy or use the product • Consumers are also protected by state laws

5. Laws that protect • Consumers from unwanted promotions • FTC adopted rules that prohibit sending unwanted commercial email messages to wireless devices without prior permission. Took effect, March 2005 • FTC adopted detailed rules that restrict sending unwanted commercial email messages to computers

6. Laws that protect • Children • Children’s Advertising Review Unit (CARU): promotes responsible children’s advertising • CARU sets high standards to assure advertising is not deceptive, unfair or inappropriate • CARU monitors and reviews advertising directed to children, initiates and receives complaints about advertising practices, and determines violations

7. Laws that protect • Children (continued)- • Federal Communications Commission (FCC) carried out the Children’s Television Act of 1990 • Limits amount of commercials to be aired in certain children’s programming to 10.5 minutes per hour on weekend and 12 minutes per hour on weekdays • Programming at issue is original productions for audiences 12 and younger

8. Regulation of • Telemarketing • National Do Not Call Registry: www.donotcall.gov or 1-888-382-1222. Your number is registered for 5 years • Telemarketers have to purchase the list from the FTC and delete numbers from their registry • Violators are subject to penalties of $11,000 per call • Exemptions: preexisting relationship, surveys, political or charitable soliciation

9. Regulation of • Data privacy • Children’s Online Privacy Protection Rule (COPPA), enacted by Congress in 1998 – parents control what information is collected online, protects 13> Health Insurance Portability and Accountability Act (HIPPA) – covers handling of medical records Gramm-Leach-Billey Act of 1999 (GLBA) – covers handling of financial records

10. Actions taken by FTC to correct misleading advertising • 1st – establish that advertising is false or misleading • Typical inquiry follows these steps: • looks at the ad from the point of view of the "reasonable consumer" • looks at both "express" and "implied" claims • looks at what the ad does not say • looks at whether the claim would be "material" • looks at whether the advertiser has sufficient evidence to support the claims in the ad

11. Reasons for regulation • Protect children • Protect consumers from false or misleading information • Health risks involved • Protection against harm to animals

12. Legality of products used in advertising can vary from country to country • Laws vary from country to country • Don’t forget about cultural issues • Be flexible about the promotion structure • Be prepared to administer the promotion differently • Privacy • Don’t rely on One “Representative” Country • Budget time and Money to get it done right